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Tiered commission calculator

In a tiered commission plan, each slice of sales is paid at its own tier's rate: sales up to quota earn the base rate and sales above quota earn the higher rate. $1,200,000 on a $1,000,000 quota at 10% and 15% pays $130,000.

Tiered commission and accelerator calculator

Estimated commission

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Results are estimates for planning only. Your employer's compensation plan governs actual payouts, including any floors, caps, credit rules and timing.

Formula

Marginal tiers:    Σ (Sales in each tier × That tier's rate)
Retroactive tiers: All sales × Rate of the highest tier reached

Example

Quota $1,000,000, sales $1,200,000, 10% up to quota and 15% above.

Marginal: $100,000 + $30,000 = $130,000. Retroactive: $1,200,000 × 15% = $180,000. Same sales, $50,000 difference, so it pays to know which one your plan uses.

Marginal or retroactive?

Marginal tiers work like tax brackets: crossing a threshold only changes the rate on the dollars above it. Retroactive tiers re-rate every dollar once you cross, which creates a large jump at each threshold. Retroactive plans are less common and usually say so explicitly.

Common questions

How many tiers do commission plans usually have?

Two or three is common: a base rate up to quota, an accelerated rate above it, and sometimes a higher rate past 125% or 150% of quota. More tiers make the plan harder to predict without a calculator.

Do tiers reset each quarter?

It depends on the plan. Annual tiers measure cumulative sales for the year, while quarterly tiers reset, which can make a big quarter pay more than the same sales spread evenly.

Is a tiered plan better than a flat rate?

For reps who regularly beat quota, tiers usually pay more. For reps below quota, a flat rate set slightly higher can pay more. Run both in the calculator with your own numbers.

What's my effective commission rate on a tiered plan?

Divide total commission by total sales. In the example above, $130,000 ÷ $1,200,000 = 10.8%, higher than the base rate because of the accelerated slice.

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